EUR/USD Cannot Really Go Up – Creates A Double-Top Of Sorts

The EUR/USD is back to the well-known trading range after a short-lived move to the upside.

The disappointing German ZEW figure casts another shadow over euro-zone growth.

The technical picture is slightly bullish, but the range may remain the king.

The EUR/USD is trading around $1.2380, balanced on the day. However, this does not tell the whole story. The pair made a move to $1.2413, matching a peak from mid-March before retreating. The US Dollar lost ground across the board early in the day, partly in a reaction to Trump. The US President tweeted that China and Russia are devaluing their currencies. This was not only a renewal of the grievances on trade but also a direct aim at foreign exchange and an indirect desire to see a weaker US Dollar.

This sent the pair higher, but the greenback then began its recovery. The falls accelerated after the German ZEW Economic Sentiment was released. The figure plunged from 5.1 to -8.2 points. The negative number represents pessimism about the economy. It was also worse than -1 expected. Moreover, also the Current Conditions component fell, albeit within expectations: from 90.7 to 87.9 points.

ZEW leads in its publication but the IFO institute has more influence. Nevertheless, the release joins a long list of shortcoming in euro-area data: both forward-looking figures and hard data show that the peak is already behind us. It may slow the European Central Bank from a quick removal of the monetary stimulus.

Later today, the US releases housing figures at 12:30 GMT. Building Permits and Housing Starts often offset each other, but if they go in the same direction, the impact could be substantial. At 13:15, Industrial Output is published, but we also have another interesting event.

John Williams is the President of the San Francisco Fed and the incoming President of the New York Fed, thus a permanent voter. Williams will speak in Madrid and may reiterate the optimistic messages he has conveyed in recent months.